Phillips to seek permits for gas line if energy bill passes

Posted: Wednesday, July 17, 2002

ANCHORAGE (AP) -- The president of Phillips Alaska Inc. said the company is prepared to begin the permitting process for a North Slope natural gas line if an energy bill passes Congress with two critical components.

Kevin Meyers, president of Phillips Alaska Inc., made the comments Tuesday at a luncheon sponsored by the Anchorage Chamber of Commerce and the Alaska Oil and Gas Association.

That bill, which is under consideration by a joint committee of the Senate and the House, contains ''certainty and expediency'' for the regulatory and permitting process, Meyers said.

The bill also contains a natural gas price floor which would mitigate the ''substantial risk for fluctuations in future natural gas prices and potential cost overruns,'' he said.

Sen. Frank Murkowski, R-Alaska, convinced the Senate to put the tax credit in its version of the energy bill. The bill says gas producers from northern Alaska should get a tax credit when gas prices fall below $3.25 per million British thermal units at a distribution hub in Alberta, Canada.

When asked if Phillips was prepared to move forward with permitting the southern route without the participation of the other two North Slope gas owners, BP and Exxon Mobil, Phillips Alaska spokeswoman Dawn Patience told Petroleum News Alaska Phillips was not prepared to comment on that at this time.

In addition to the price floor, the bill would prohibit construction of a pipeline along the northern route, through Canada.

Exxon Mobil spokesman Bob Davis said passage of a federal energy bill would not make a gas line from the North Slope economic. Davis said Exxon Mobil also wants flexibility in the choice of a route and is opposed to a gas price floor.

Dave Van Tuyl of BP, commercial adviser in the Alaska Gas Group, said it would take more than federal legislation to get the company to move forward with the project.

''While the proposed U.S. federal enabling legislation is one vital requirement there are still three other elements required to justify moving forward with the project. And those other elements include further clarity and efficiency of the Canadian regulatory process, assurance of fiscal certainty here in Alaska, and, of course, confirmation that the project itself is commercially viable,'' Van Tuyl told Petroleum News Alaska.

Whether or not Phillips will get the legislation it favors remains to be seen.

Energy Secretary Spencer Abraham has said the Bush administration objects to the price floor. He also criticized language in the bill that prohibits a northern route pipeline.